We often hear things about credit records and how important they can be for us. However, not everyone has an understanding of what they are and whether it is worth improving them. It is well worth understanding more about them and then you can make a decision as to whether you feel that you should improve yours.
What is a credit record?
A credit record is information about each of us and our finances. It is something which is produced by several companies and that we can look at for free and that other people can also check. It will have information on any loans that you have, any regular payments you are making (such as rent, contracts, direct debits to utility companies) and any CCJ (county court judgements) or late or missed payments for any bills. It will also have information about any companies that have looked at the record lately, such as lenders, insurers etc.
The point of the credit record is that a company, such as a lender, landlord or insurer, will take a look at it to decide whether they are willing to take you on as a customer. They want to see whether you can be trusted with regards to committing to making payments.
What are the advantages in having a good one?
This means that if you have a good credit record, then you are more likely to be accepted for a loan, rental agreement or direct debit. This is something that can be really important. You might think that you will not need a loan but if you decide you want to buy a house then you will need a mortgage or otherwise you will need to rent somewhere and landlords also do a credit check so it could mean you have difficulty finding somewhere to live. You will need to think about the fact that if you want to pay direct debit for utility bills you will need a good credit record to, without this you may have to have a pre-payment meter which is more expensive to run. You may find that if you want to borrow money, if you do not have a good credit record it may be very hard to find a lender and you may have to pay more because of the risks.
Should I improve mine?
Therefore, it is a good idea to make sure that your credit record is as good as it can be. This will then open up future opportunities for borrowing money and things like that. It is something which has an impact on a lot of things and therefore it is important. However, if your credit report is already good, then there will be no need to do anything but you will need to take a look and check it. You can do this for free online, so it is simple. Once you have it, it is wise to make sure that everything on it is correct. If there are things on it that are wrong then you need to get these changed because otherwise you might be unfairly judged due to this. You should also look to see if there are things on there which are correct but work against you. Perhaps having lots of loans, not having very high earnings or things like this which you might be able to do something about. It may not be easy to change these things, to pay off loans or find a better paid or more secure job but they can help you on a personal level as well as on your credit record. This is because you will have more money to spend on things, less loan repayments to have to cover and just generally find it easier to pay for everything that you need and want. Doing things that will specifically improve your credit record will also improve your own financial situation so it is well worth doing them.